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Showing 8 results for Generalized Method of Moments
Abbas Assari, Alireza Naseri, Majid Aghaei,
Volume 9, Issue 3 (10-2009)
Volume 9, Issue 3 (10-2009)
Abstract
Casual relationship between financial developments and economic growth is one of the striking empirical macroeconomic relationships. Following the development of financial issues, our attention turns from economic growth to another issue of economic welfare. In this study, we try to examine the relationship between financial developments, economic growth, poverty and inequality in OPEC countries. The simulation of the models and statistical inferences, in this study, are based on the static and dynamic panel data approach. The empirical models are estimated by using GMM estimators, fixed effects and random effects using the data between 1990 and 2004. The results of this study show that financial developments through its effect on economic growth can mainly contribute poverty alleviation and inequality reduction in these countries.
Tahere Pirani, Rozita Moayedfar,
Volume 16, Issue 1 (5-2016)
Volume 16, Issue 1 (5-2016)
Abstract
In urban and regional economics’ literature, according to the concepts of new economic geography model (NEG) and endogenous growth model, spatial agglomeration of economic activities and economic growth are interrelated processes. In the endogenous growth models, how to create new economic activities through innovation is checked. Moreover, the NEG model aims to investigate how to establish these new economic activities, and cause of their concentration. Therefore, innovation, location and growth are interconnected processes within the NEG model. This article examines theoretically and experimentally the effects of economies of industrial agglomeration on economic growth in Iran’s provinces. In theoretical section, a NEG model has been presented. It shows that the agglomeration of industrial activity affects the economic growth. In the experimental section, a model has been estimated by applying Generalized Method of Moments (GMM) using provincial data during 2000-2009. The results indicate the positive and significant impact of industrial agglomeration on economic growth in provincial level in Iran. Also, the amount of industrial agglomeration has been calculated by Maurel-Sedillot index within the 2-digit ISIC codes, which shows that the other transport equipment industry (code -35) has the largest agglomeration, and printing and publishing industry (Code -22) has the smallest agglomeration.
Mrs. Fatemeh Karampoor Goruhi, Dr Ali Dehghani,
Volume 19, Issue 2 (6-2019)
Volume 19, Issue 2 (6-2019)
Abstract
This study examines the effects of ownership, competitiveness, firm size and research and development (R&D) expenditure on exports of Iran's vehicles manufacturing industries. A panel data model is set up using 4-digit codes of the International Standard Industrial Classification (ISIC) related to vehicles manufacturing industries in Iran over the period 2005-2013. The dynamic panel data technique and two-stage generalized method of moments (Arellano and Band method) are used to estimate the econometric model. The estimation results indicate positive and significant effects of private ownership, R&D expenditure and competitiveness on export intensity in Iran's vehicles manufacturing industries. According to the positive effect of the private ownership on exports, facilitating the entrance of the other private firms aiming at producing and exporting of vehicles’ products can be a considerable step for promoting foreign trade in Iran. In addition, findings show that real exchange rate has no significant effect on export intensity among mentioned industries. Moreover, higher tariff rates on imports of vehicles in Iran and higher relative prices of vehicles compared to world prices have limited the potential of exporting the products of such industries.
Dr Yousef Eisazadeh Roshan, Dr Majid Agahaei,
Volume 19, Issue 4 (12-2019)
Volume 19, Issue 4 (12-2019)
Abstract
This paper aims to examine the effects of access to information and communication technology (ICT) on income distribution in Iranian provinces, with an emphasis on the per capita income and education. Using economic theories, the relationship between access to ICT and income distribution was evaluated within a dynamic panel model by use of Generalized method of moments (GMM) during 2010-2015. The results indicate that access to ICT significantly reduces income inequality. In addition, education as a complement factor for ICT, strengthens the positive impact of access to ICT on reducing income inequality. This impact is greater among provinces having lower GDP per capita than nation-wide GDP per capita. Furthermore, inflation rate leads to an increase in income inequality, and government spending is not an influential factor in the proper distribution of income in the provinces of Iran.
Mrs. Hadiseh Taghizadeh Elyas Abad, Ali Rezazadeh, Dr Khalil Jahangiri,
Volume 21, Issue 3 (9-2021)
Volume 21, Issue 3 (9-2021)
Abstract
The purpose of this research is to study the effects of democracy and corruption on attracting foreign direct investment in West and East Asia. To do this, a dynamic panel model and generalized method of moments are employed over the period 2009-2018. The results of the estimates for the 13 countries of the West Asia Group indicate a positive and significant relationship between the democracy and foreign direct investment and the existence of a significant negative correlation between corruption and the consumer price index with the foreign direct investment. Also, in this group of countries, the effects of the degree of trade openness, democracy and real exchange rate on foreign direct investment were positive and significant and the effects of corruption and consumer price index were negative and significant. Besides, according to the results of this method for 15 East Asian countries, the corruption and consumer price index had negative and significant effects, and the democracy, corruption, trade openness, economic growth and real exchange rate had positive and significant impacts on foreign direct investment. Therefore, regarding the effect of democracy on attracting foreign direct investment, Jensen's theory was approved in both groups of countries, but regarding the effect of corruption on FDI, in East Asia the theory of helping hand of corruption and in West Asia the theory of destructive hand or the corruption was confirmed. According to the results, the impact of these variables on foreign direct investment in the East Asian group was greater than the West Asian group.
Mrs. Azadeh Arab, Dr Ahmad Sarlak, Dr Mojtaba Ghiasi, Dr Maryam Sharifnezhad,
Volume 21, Issue 4 (11-2021)
Volume 21, Issue 4 (11-2021)
Abstract
Financial development and stability and their relationship with economic growth is one of the most important and influential issues in economic growth. Therefore, economists have studied this issue by exerting different conditions. The main purpose of this study is to evaluate the impact of financial development and financial stability on Iran's economic growth using the generalized method of moments (GMM) during 1992-2019. The results show positive and meaningful effects of financial development and financial stability on economic growth. The variables of lagged economic growth, education, fixed investment and trade liberalization have positive and significant effects on economic growth, while, inflation, government expenditure and active population have negative impacts on economic growth. Therefore, considering the important role of education, it is recommended to government to invest in this sector and upgrade the production structure, make the necessary structural reforms in the capital market and banking system, direct credit and liquidity to strengthen private sector production, as well as improve the level and composition of government spending in order to increase production efficiency.
Dr Bakhtiar Javaheri, Mrs. Homeyra Shahveisi, Mrs. Samira Mohammadi,
Volume 23, Issue 2 (5-2023)
Volume 23, Issue 2 (5-2023)
Abstract
Aim and Introduction
In recent decades, the environment has become one of the most important concerns of societies and governments. Achieving economic growth and development is costly and leads to an increase in the consumption of ecological capital. The efforts of countries to increase per capita income and prosperity, if not accompanied by environmental considerations, will bring irreversible losses, including rapid climate change and environmental destruction. Thus, comprehensive investigation and determination of economic and non-economic effective factors on the environment is of particular importance, to the extent that it has forced governments to adopt short- and long-term policies and programs to protect the environment.
The existing economic literature on the Environmental Kuznets Curve (EKC) hypothesis indicates that at a threshold level of per capita income, countries reach a level of development where environmental improvements are achieved, but these studies have a serious flaw. Because they only focus on GDP per capita as a key variable to achieve environmental improvements and ignore the social dimension which is considered the pillar of sustainable development. Since the human development index includes the simultaneous description of social development and economic development, therefore, in this research, the Human Development Index is used instead of GDP per capita to investigate the Environmental Kuznets Curve (EKC) hypothesis and the relationship between HDI and the quality of the environment. Furthermore, political institutions can have a long-term direct impact on the environment and its sustainability. Therefore, investigating whether the indicators of human development, political and civil liberties can affect the quality of the environment, can be important.
Method
In the present study, the effects of human development, political and civil liberties indicators on the environmental performance index (Ecological Footprint) in developing countries and developed countries are investigated using the System Generalized Method of Moments method (GMM-SYS). Then the Environmental Kuznets Curve hypothesis is investigated in selected countries. Likely, a country that has benefited from more ecological capital for its needs in the past will be more prone to environmental destruction and use of ecological resources in the future. Therefore, it is necessary to investigate the impact of the variable interruption of the ecological footprint on its value in the current year. Accordingly, in this research, the method of the System generalized moments is used, which helps to solve the possible problems of endogeneity caused by the existence of an interval of the ecological footprint variable as an independent variable by using instrumental variables.
The Generalized Moments' estimator is used in cases where the independent variables of the model are not completely exogenous. This estimator controls for the endogeneity problem by using instruments from the intercept of the dependent variable or the intercept of any other endogenous variable that is assumed to be uncorrelated with the fixed effects. The validity of the tools used in the model can be measured using the j-Hansen (1982) and Arellano and Bond AR (2) tests.
Findings
The results of the research indicate that the Human Development Index in selected developing and developed countries has a significant and negative effect on the ecological footprint, and a higher human development index is useful for improving the quality of the environment and reduces of pollutant emissions. Therefore, when the level of income, education, and health services in a country improves, the awareness of the importance of a safe and quality environment will increase. Similarly, according to the results of the Kuznets hypothesis, the relationship between the Human Development Index and the ecological footprint in the studied countries, confirms the hypothesis of Kuznets and the inverted U.
The index of political development and civil liberties has a negative and significant effect on the ecological footprint in both developing and developed countries. It seems that the increase in civil liberties, higher democracy, and improvement of political rights will reduce the damage to the environment.
The results suggest that with the increase in the consumption of fossil fuels, more pollutants are released into the environment, which leads to the destruction of the environment and harming it. Based on the results of the research, it can be said that trade liberalization and active international trade allow the transfer of newer technologies to developing countries that produce fewer pollutants. In addition, increasing urbanization in developing countries has a negative impact on the quality of the environment, but countries that focus more on economic development and scale can improve the quality of the environment by promoting the use of advanced technologies in parallel with urbanization.
Discussion and Conclusion
The findings of the research indicate that policymakers are more likely to achieve sustainable economic development by improving the level of the human development index. Therefore, providing education and a health care system for all members of society can lead to the reduction of environmental degradation through the improvement of the human development index; Thus, increasing democracy, clarifying laws and regulations, freedom of assembly, freedom of the media and awareness can control corruption and prevent the personal use of natural and environmental resources by officials and powerful people.
Policies such as pollution tax, green tax, development of energy-saving vehicles, and replacing them with worn-out vehicles can reduce energy consumption and reduce the emission of pollutants in the environment. Furthermore, increasing the degree of trade openness allows the entry of advanced and improved technologies that produce less pollution. Therefore, policymakers in developing countries are advised to import clean and renewable energy technologies to their country by increasing active international trade.
Keywords: Human Development Indicator, Political Development Indicator, Ecological Footprint, Environmental Kuznets Curve (EKC) Hypothesis, Systemic Generalized Method of Moments
JEL Classification: F18, O13, P28, P48, Q56
In recent decades, the environment has become one of the most important concerns of societies and governments. Achieving economic growth and development is costly and leads to an increase in the consumption of ecological capital. The efforts of countries to increase per capita income and prosperity, if not accompanied by environmental considerations, will bring irreversible losses, including rapid climate change and environmental destruction. Thus, comprehensive investigation and determination of economic and non-economic effective factors on the environment is of particular importance, to the extent that it has forced governments to adopt short- and long-term policies and programs to protect the environment.
The existing economic literature on the Environmental Kuznets Curve (EKC) hypothesis indicates that at a threshold level of per capita income, countries reach a level of development where environmental improvements are achieved, but these studies have a serious flaw. Because they only focus on GDP per capita as a key variable to achieve environmental improvements and ignore the social dimension which is considered the pillar of sustainable development. Since the human development index includes the simultaneous description of social development and economic development, therefore, in this research, the Human Development Index is used instead of GDP per capita to investigate the Environmental Kuznets Curve (EKC) hypothesis and the relationship between HDI and the quality of the environment. Furthermore, political institutions can have a long-term direct impact on the environment and its sustainability. Therefore, investigating whether the indicators of human development, political and civil liberties can affect the quality of the environment, can be important.
Method
In the present study, the effects of human development, political and civil liberties indicators on the environmental performance index (Ecological Footprint) in developing countries and developed countries are investigated using the System Generalized Method of Moments method (GMM-SYS). Then the Environmental Kuznets Curve hypothesis is investigated in selected countries. Likely, a country that has benefited from more ecological capital for its needs in the past will be more prone to environmental destruction and use of ecological resources in the future. Therefore, it is necessary to investigate the impact of the variable interruption of the ecological footprint on its value in the current year. Accordingly, in this research, the method of the System generalized moments is used, which helps to solve the possible problems of endogeneity caused by the existence of an interval of the ecological footprint variable as an independent variable by using instrumental variables.
The Generalized Moments' estimator is used in cases where the independent variables of the model are not completely exogenous. This estimator controls for the endogeneity problem by using instruments from the intercept of the dependent variable or the intercept of any other endogenous variable that is assumed to be uncorrelated with the fixed effects. The validity of the tools used in the model can be measured using the j-Hansen (1982) and Arellano and Bond AR (2) tests.
Findings
The results of the research indicate that the Human Development Index in selected developing and developed countries has a significant and negative effect on the ecological footprint, and a higher human development index is useful for improving the quality of the environment and reduces of pollutant emissions. Therefore, when the level of income, education, and health services in a country improves, the awareness of the importance of a safe and quality environment will increase. Similarly, according to the results of the Kuznets hypothesis, the relationship between the Human Development Index and the ecological footprint in the studied countries, confirms the hypothesis of Kuznets and the inverted U.
The index of political development and civil liberties has a negative and significant effect on the ecological footprint in both developing and developed countries. It seems that the increase in civil liberties, higher democracy, and improvement of political rights will reduce the damage to the environment.
The results suggest that with the increase in the consumption of fossil fuels, more pollutants are released into the environment, which leads to the destruction of the environment and harming it. Based on the results of the research, it can be said that trade liberalization and active international trade allow the transfer of newer technologies to developing countries that produce fewer pollutants. In addition, increasing urbanization in developing countries has a negative impact on the quality of the environment, but countries that focus more on economic development and scale can improve the quality of the environment by promoting the use of advanced technologies in parallel with urbanization.
Discussion and Conclusion
The findings of the research indicate that policymakers are more likely to achieve sustainable economic development by improving the level of the human development index. Therefore, providing education and a health care system for all members of society can lead to the reduction of environmental degradation through the improvement of the human development index; Thus, increasing democracy, clarifying laws and regulations, freedom of assembly, freedom of the media and awareness can control corruption and prevent the personal use of natural and environmental resources by officials and powerful people.
Policies such as pollution tax, green tax, development of energy-saving vehicles, and replacing them with worn-out vehicles can reduce energy consumption and reduce the emission of pollutants in the environment. Furthermore, increasing the degree of trade openness allows the entry of advanced and improved technologies that produce less pollution. Therefore, policymakers in developing countries are advised to import clean and renewable energy technologies to their country by increasing active international trade.
Keywords: Human Development Indicator, Political Development Indicator, Ecological Footprint, Environmental Kuznets Curve (EKC) Hypothesis, Systemic Generalized Method of Moments
JEL Classification: F18, O13, P28, P48, Q56
Mr Hamidreza Naeb Khosroshahi, Dr Mohammadreza Nahidi Amirkhiz, Dr Mohammadali Motafakker Azad, Dr Seyyed Ali Paytakhti Oskooe,
Volume 24, Issue 3 (9-2024)
Volume 24, Issue 3 (9-2024)
Abstract
Introduction
Economic development is one of the main goals of all countries, and most scientists believe that development is only accessible if there is equality. For this reason, despite the differences and contradictions in schools and societies, the issue of inequality and especially economic inequality has been always a vital concern of economists and policymakers all over the world. Meanwhile, since justice is one of the fundamental goals of Islam, Islamic economists have a more scrutinizing and much clear vision of equality. Apart from the importance of economic equality in Islam, it has a cucial role in social security systems and equality concepts as well. Takaful insurance, is a widely used Islamic model in insurance risk coverage which has fundamental differences with conventional insurance mechanisms. Takaful is cooperative, not profit oriented, and fully allined and complied with Islamic rules and regulations. This study is aiming at investigating the effect of various layers of social security system on Islamic-economic equality in the Iranian provinces during 2008-2021. GMM prediction model is applied for predicting the effect of Takaful on inequality and directing houshold religious expenses towards Takaful insurance.
Methodology
According to previous theoretical and experimental literature, economic inequality can be affected by inequality in previous years. Therefore, in this study a dynamic econometric method is used to include the lagged dependant variable as one of the explanatory variables. In general, if a variable depends on vaiables of previous periods, among other independent ones, it is better to use a dynamic panel data model. Generalized method of moments is one of the common and widely used dynamic approaches. The reason for the popularity of this method is that it is very flexible and requires only some weak assumptions. Therefore, Generalized Method of Moments (GMM) greatly solves the problems of static panel data methods related to autocorrelation, variance heterogeneity, and skewness. The reason for using this method is that, firstly, there is a possibility that the current dependent variable is affected by the lagged variables, and secondly, since one of the ways to control the endogeneity of variables is to use instrumental variable and due to the fact that it is very difficult to find such an instrument, it is possible to use lagged variables as appropriate instruments applying GMM estimator.
Findings
The results of this research indicate that the inequality of the previous period has a positive and significant relationship with current economic inequality in all three models. This means that high inequality in the previous period causes high inequality in the current period. Moreover, consistent with some studies, GDP has a positive and significant relationship with economic inequality. It means that an increase in GDP is associated with increased inequality. This result indicates that in Iran, there is no antipoverty growth. Inflation rate has also a negative relationship with inequality in all models, and this relationship is significant in two models. Following some previous studies, this result can be interpreted as the negative relationship can be caused by the fact that the inflation of luxury goods is higher than the inflation of essential goods and therefore, increased inflation is more detrimental to the rich. In addition, all three layers of social assistance, basic social insurance, and supplementary social insurance significantly reduce inequality. Meanwhile, basic social insurance has the greatest effect, and social assistance has the least effect on reducing inequality. In addition, based on the results, it can be stated that by directing houshold religious expenses towards Takaful insurance, which is an Islamic insurance and a type of basic social insurance, it is possible to reduce Islamic-Economic inequality in 2023 and 2024. The amounts of the decreases are predicted to be a minimum of 0.31 and 0.25 (Chahar Mahal and Bakhtiari) and a maximum of 5.95 and 5.91 (Markazi).
Discussion and Conclusion
According to the results, investing in all three layers of social security can lead to a reduction in inequality. Therefore, it is suggested not to ignore any layer in policymaking. Due to the greater impact of basic insurance on equality, it is thought to consider it as the basic layer of social security and focus on this layer to reduce inequality more. Managers and policymakers can also focus on Takaful as one of the basic types of insurance and help to provide Islamic-Economic equality by directing houshold religious expenses towards Takaful. Moreover, it is suggested that the governmental plans should be based on combining economic growth with improved welfare and income distribution which is one of the main goals of the Islamic economy. It is also suggested that the religious and cultural officials should create the necessary explanation and enlightenment related to Takaful and social responsibility of people. The government responsiblity in creating a foundation and guiding people to fulfill their social responsibility by strengthening and developing Zakat headquarters and communicating with social security organization should not be underestimated.
Economic development is one of the main goals of all countries, and most scientists believe that development is only accessible if there is equality. For this reason, despite the differences and contradictions in schools and societies, the issue of inequality and especially economic inequality has been always a vital concern of economists and policymakers all over the world. Meanwhile, since justice is one of the fundamental goals of Islam, Islamic economists have a more scrutinizing and much clear vision of equality. Apart from the importance of economic equality in Islam, it has a cucial role in social security systems and equality concepts as well. Takaful insurance, is a widely used Islamic model in insurance risk coverage which has fundamental differences with conventional insurance mechanisms. Takaful is cooperative, not profit oriented, and fully allined and complied with Islamic rules and regulations. This study is aiming at investigating the effect of various layers of social security system on Islamic-economic equality in the Iranian provinces during 2008-2021. GMM prediction model is applied for predicting the effect of Takaful on inequality and directing houshold religious expenses towards Takaful insurance.
Methodology
According to previous theoretical and experimental literature, economic inequality can be affected by inequality in previous years. Therefore, in this study a dynamic econometric method is used to include the lagged dependant variable as one of the explanatory variables. In general, if a variable depends on vaiables of previous periods, among other independent ones, it is better to use a dynamic panel data model. Generalized method of moments is one of the common and widely used dynamic approaches. The reason for the popularity of this method is that it is very flexible and requires only some weak assumptions. Therefore, Generalized Method of Moments (GMM) greatly solves the problems of static panel data methods related to autocorrelation, variance heterogeneity, and skewness. The reason for using this method is that, firstly, there is a possibility that the current dependent variable is affected by the lagged variables, and secondly, since one of the ways to control the endogeneity of variables is to use instrumental variable and due to the fact that it is very difficult to find such an instrument, it is possible to use lagged variables as appropriate instruments applying GMM estimator.
Findings
The results of this research indicate that the inequality of the previous period has a positive and significant relationship with current economic inequality in all three models. This means that high inequality in the previous period causes high inequality in the current period. Moreover, consistent with some studies, GDP has a positive and significant relationship with economic inequality. It means that an increase in GDP is associated with increased inequality. This result indicates that in Iran, there is no antipoverty growth. Inflation rate has also a negative relationship with inequality in all models, and this relationship is significant in two models. Following some previous studies, this result can be interpreted as the negative relationship can be caused by the fact that the inflation of luxury goods is higher than the inflation of essential goods and therefore, increased inflation is more detrimental to the rich. In addition, all three layers of social assistance, basic social insurance, and supplementary social insurance significantly reduce inequality. Meanwhile, basic social insurance has the greatest effect, and social assistance has the least effect on reducing inequality. In addition, based on the results, it can be stated that by directing houshold religious expenses towards Takaful insurance, which is an Islamic insurance and a type of basic social insurance, it is possible to reduce Islamic-Economic inequality in 2023 and 2024. The amounts of the decreases are predicted to be a minimum of 0.31 and 0.25 (Chahar Mahal and Bakhtiari) and a maximum of 5.95 and 5.91 (Markazi).
Discussion and Conclusion
According to the results, investing in all three layers of social security can lead to a reduction in inequality. Therefore, it is suggested not to ignore any layer in policymaking. Due to the greater impact of basic insurance on equality, it is thought to consider it as the basic layer of social security and focus on this layer to reduce inequality more. Managers and policymakers can also focus on Takaful as one of the basic types of insurance and help to provide Islamic-Economic equality by directing houshold religious expenses towards Takaful. Moreover, it is suggested that the governmental plans should be based on combining economic growth with improved welfare and income distribution which is one of the main goals of the Islamic economy. It is also suggested that the religious and cultural officials should create the necessary explanation and enlightenment related to Takaful and social responsibility of people. The government responsiblity in creating a foundation and guiding people to fulfill their social responsibility by strengthening and developing Zakat headquarters and communicating with social security organization should not be underestimated.
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